Why Should We Invest in Big Business if it Generates Only Meager Employment?

Today is Vishvakarma Puja Day in India, the day in which the working class Hindus in most factories and work places across the nation to pay homage to the divine architect god, Vishvakarma Bhagavan (god). The practice of worshiping Vishvakarma on a working day at the work place was started in a big way by the management of the first integrated steel plant in India -The Tata Iron and Steel Company Limited (TISCO) at Jamshedpur, Jharkhand state, India, several decades ago. It is celebrated generally on 17th September every year and is very popular in the Indian states of Jharkhand, Odissa, West Bengal, Bihar, Chhattisgarh, Uttar Pradesh, Karnataka, etc where most of the iron and steel industries of India are located.

Some decades ago, the integrated steel plant managements allowed general public to visit the large works areas on the Vishvakarma Day and the steel workers and their families and relatives celebrated the day by conducting pujas (worship) of the god in the various productions shops and offices of the steel plants with full enthusiasm. This practice of allowing the general public to the work places of the steel plants got stopped when some governmental authorities put an end to it citing security concerns.

But the practice of worshiping the god in the work place on this day by the employees is being continued in these work temples of modern India. The day, though not a holiday, is a practically a kind of holiday for the workmen as the main work during this day is the puja activities!

The Tata steel management has perhaps sponsored this puja in a big way to promote the concept of work is worship and to keep the morale of the working class high by attaching divinity to work and also to invoke the god for their safety and prosperity in an otherwise risky working place.

In those days, an integrated steel plant used to be the real prime mover of the economy as it provided employment to millions of people, directly and indirectly. The government too used to consider the steel plants with due respect and regards as they knew its importance to the economy of the nation well, regardless of the fact that a steel plant actually showed any profits on its balance sheets. In reality, the integrated steel plants generated huge wealth and distributed it by being the main economic driver and the employment creator even when they showed meager profits or even losses on the balance sheets.

Moreover, the integrated steel plants never used to be considered as an industry which needs to show quick profits. It used to be a stable and steady business operation in a massive way and provided much income to the government by way of direct and indirect taxes and also provided direct and indirect employment to so many people who earned decent incomes.

In later years, some unthinking economists and media men made so much hues and cries over the balance sheets of the steel plants and stupidly declared them as wealth destroyers on the basis of the balance sheet evaluations which forced the steel plants to change track from their earlier concepts. Then began the foolish acts where profits were projected above employment. The future generations lost the opportunity to work stably in these work temples of India (perhaps elsewhere too, like the USA)

The thrust of the steel industry shifted to final balance sheet profit making rather than overall wealth creation! As a result the steel industry globally resorted to massive investments to enhance capacities to produce massively without creating equivalent employment opportunities! On the other hand, stupidity of economists and media caused fly by wire industries and businesses to get prominence in the society as main wealth creators. The stress shifted to quick profitability rather than consistency and overall benefit to society on a long term basis.

This stupidity of the so-called media savvy economists caused great damage to all nations due to the stupid globalization that set in without any one seriously studying the overall imbalances that could potentially generate. No one really realized the great harm due to such imbalances in the economies of the world working under conditions that are in no way to be termed as a level playing field! The market driven economies of the world forcibly came in to existence by the vision-less policies of some of the world leaders under influence by the modern day short sighted economists have now come to a stage of full scale collapse. It is affecting millions of young people across the world now. Young people in millions are becoming jobless now and their populations are increasing.

While the media savvy economists keep playing with their macro economic theories based on statistics of numbers, the ground realities are some thing else.

See these reports which should be sufficient to open the eyes of any one with some common sense:

In the north Indian state of Uttar Pradesh, for 368 posts of the lowest paid peon's job 2.3 million young jobless people have sent their applications! The report says that out of these some 175000 are engineering and commerce graduates. There are also some 255 odd PhD holders!(Read this report!)

On the other hand, highly skilled Indian youths are just fleeing the country for job opportunities abroad as they fail to find any worth while job within their own country! ( Read these: Report-1 & Report-2). Some say the brain and arm drain is good for India as it brings valuable foreign exchange to the country to make its monetary system strong. Some others are of the opinion that the high exodus of Indian youths to other countries in search of employment should be encouraged at all costs by training the Indian youths for employment outside rather than for their own country. Yet some others see the migrating Indians as a great opportunity to spread the Indian culture worldwide. I am not going in to that debate.

The reality is that India is failing to provide employment to its millions and millions of youths within the country. Some Indian industrialists keep complaining about the Indian education system; the education system of India does not enhance skills of the youths that they can be employed, they argue.

But the Indian policy makers and administrators seem to lack the sense and ability to convert the potential strengths of India to more and more opportunities. There actions are not enough to tackle the growing problem of unemployment. They should introspect why the 'make in India' campaigns are not giving measurable and notable results.

As I have written in some blogs earlier, one of the most important action that the Indian administration should do is to enhance the incomes of the people at the lower economic strata so that domestic consumption of goods and services increase and demand rises.

There are many ways by which the government can boost the employment opportunities in the country. But the first objective and priority of the government should be employment generation and nothing else. The government should consider giving appreciable tax rebates for companies and organisations who are good in creating more and more permanent jobs with salaries of employees above the minimum income taxable level. In other words, corporate tax level should come down as the employee strengths above taxable salary level increase.

It should be the priority of the government to find new job avenues. Firms that come up with new concepts and ideas which enhances employment should be given priority for government approvals rather than those coming up with higher capital expenditure or higher returns only.

Technical and financial audits of all investments should be made mandatory. More and more private audit organizations should be allowed to be set up for this purpose. Similarly for all doctors and hospitals, it should be mandatory to provide the medical reports to the patient within a reasonable time of say one week so that the report could be filed with the medical insurance companies or for other purposes as decided by the patients or their relatives. The authorities should study the employment generation potential and the practice of medical transcriptions within India in the coming years.

Social security system should be enhanced with higher returns to the participants instead of the peanut schemes of the government as of now. If needed more and more social security organizations should be set up. Contributions to the social security system should be made mandatory for all working individuals. All working individuals should have just one social security number and the system of joining, continuation and getting benefits should be simple and practical instead of the present member unfriendly systems. 

Real estate companies should be allowed to run and manage the colonies and the flats they build and sell on a long term basis on a chargeable basis in a professional manner. The present system of forcing the owners associations to manage the residential colonies and apartment complexes should be discontinued. The real estate companies should also be allowed to set up residential complexes with units leased on rental charges. 

Skills and training need to be given due importance. It should be mandatory for employers to employ people with proven training and skills for a particular technical or professional job. In other words, the skills imparted at professional college levels should continue in the job front as well. The practices of employing any tom-dick-and-harry for any job should be restricted by statutes. Employers must be mandated to issue specific skill and experience certificates to employees on an annual basis which should be used to build the national skill and experience pool.

It should be mandatory for professionals to be members of their professional associations or institutions which are recognized by the government. Those who are not members of such professional guilds should not be allowed to work in that profession. It should be the responsibility of these guilds to ensure minimum professional skill and experience levels for their members for a particular professional job.

There are several other things that could be thought of. But for all these, the primary objective should be employment generation and all other objectives should come later.

If there is a will, there is a way.

Will our leaders listen? Will our leaders lead this country to prosper for the benefit of each and every citizen? Will they use their thought faculties properly and act? Let us wait and watch. After all, our leaders too are from our own lots! If we think better, they too would.

Generating Employment for Indians- A Layman's Suggestions !

I am not an economist nor an expert in finding solutions to the complex problems of a complex nation like my own !

But like many others like me, I do keep a watch on developed nations such as the United States of America or China or Japan, that have been making visible material progress. Their Gross Domestic Product (GDP), per capita income ,  human development indices (HDI), etc., amply correlated by visible physical features vindicate their superiority!

For example, my country India has been with a shamefully low per capita GDP of about $ 3700 . The actual purchasing power of the citizens of India are much lower than this figure. Regrettably, it appears that the Indian policy makers no longer feel the shame ! [See the GDP per capita income list of the world's nations here !]

Indians keep justifying the low per capita GDP on account of the huge population. But then they forget about China whose population as well as the per capita GDP are much higher ! This clearly shows that the Indian situation is on account of poor governance , administrative policies and gross mismanagement of public affairs! Perhaps all these happen due to the defective democratic governance system that the country has adopted ever since it had become a modern republic. 

Indians are too keen to watch the politics and policies of America rather than their own. I too am no exception. What makes me salute the American system is the importance that they give in generating employment to the citizens of the country. A US president is evaluated as good if he could implement policies which generate employment to the US nationals.

But unfortunately no Indian politician talks about employment generation. Neither is employment a factor for evaluating the Indian government!

There are thousand an one ways by which the Indian government can generate employment for millions of its unemployed so that they can at least have a decent living and surely elevate them much above the poverty line.

" Give me a fish, I eat for day; teach me to fish, I eat for a life time!"

This famous quote, supposed to be the favorite of Mahatma Gandhi is not unknown to those in the higher ruler ship of India. Regrettably they keep thinking of the ways in which such a teaching can be imparted to the millions only to conclude that such a thing is not practical in a country populated so heavily!

When thousands of Indians could make a decent living by the so called medical transcription work, I couldn't help saluting the US policy makers who could force their medical practitioners to shell out some of their incomes to others down the line who are only skilled for some lower level clerical jobs!

The westerners are advanced because they have realized the overall advantage of distributing the abnormal wealth at some hands to those who are not so privileged or fortunate. They too were having the mindset of the present day Indians before they faced the 'great economic depression after the world war-I'. But that had made them learn a lesson. And that lesson was about the importance of sharing the profits of business and industry to the larger populace for sustaining economic activities. 

The great depression forced economists to analyze the reasons for such a failure of economy when industrial production was at its peak! They found that all productions are useless unless there is a market that absorb the products and services. And such a sustainable market is possible only when business and industry willingly share their profits with their employees and the workers thereby enhancing the purchasing power of the people as a whole!

They learnt that the profits held up by large Corporate entities are not going to make the country or the economy progress. If they keep producing and accumulating profits for some time without enough sharing, there would not be any markets for their products and services and eventually their businesses would come to a grinding halt.

So, for longer sustainability of business, business tycoons and business leaders have to find ways to distribute their huge cash surplus held up by a few of them to a larger group of people, so that the latter could get some decent  income margins to be spent for more goods and services.  

Again at every such transaction, the government is going to earn from the taxes.

Indian corporates and government  are going to repeat the mistake that the westerners did early in the 20th century which triggered the Great Depression of the 1929.

Why I say this ?

Read this report : Large Indian companies sitting on Rs 4.2 lakh cr excess cash  !!

Had they distributed even 10 % of this cash, which in any case they have amassed by paying less to their employees in comparison to the world standards, the Indian markets would boom. The Indian government would gain substantially in taxes, both income tax and other taxes.

The cash surplus of the Indian corporates are because of their reluctance to pay dividends to their share holders and their reluctance to pay better wages to their lower rung workers and employees.

The cash surplus with them cause them to show a higher book value for their shares. This in turn causes poor investors to shell out their hard earned cash to purchase shares of these companies at higher margins. The investors do not get any return from the company as such. The investors seem to make profits by selling their high margin shares to other gullible investors. The corporates have nothing to lose !

Why such a situation which actually do not help the majority of the Indian public to enhance their incomes so that they have some better  incomes for acquiring better goods and services ?

Whatever the low income, the government tax them heavily. What is the logic in taxing an individual who makes Rs 150,000/- ( ~ $ 3000) per month and the corporate which makes Rs 150 million at the same rate ?

The individual is left with Rs. 100,000 /- where as the corporate is left with Rs.100 million. Since both are individual entities, the money deprivation shock to the individual is much more. The excess money accumulated by the corporate does not do any good for the country ordinarily. Because it it blocked so long as they find some means of spending it. The individual on the other hand has many unfulfilled needs. He could have released that 50,000 immediately to the market had it not been cut by the government as tax. The government would have got an equivalent amount or much more had this money were used by the individual for meeting his unfulfilled needs.

This kind of illogical mind sets in the policy planning levels actually make India a poor nation. They do such things which causes the money generation points dry before they mature.

Killing the goose ?

India can become the richest nation in the world, had the negative growth policies made out by egoistic know-all mindset of those concerned decide to ease out a bit by relaxing their muscles and minds.

Instead of distributing money for various labour generating schemes  here and there, if the government allows all higher income group salaried people who pay more than say Rs.300,000 per year as income tax to have a regular personal assistant for jobs like driver, gardener, security, etc and the payments made to such people to the extent of say Rs.200,000 as fully exempted from tax, can you imagine the number of regular employment generated in India overnight ?

Of course, some people might always do some manipulations. That should not be the reason for not trying out some innovative methods.

That kind of an initiative can make the government popular overnight . Not only they become popular, the economy would boom. It is a kind of action that can force the higher income of the upper strata of society to percolate downwards immediately.

In reality the government's income is not going to get reduced. It will also boom !

There could be many such moves. But for that the government should be ready to take suggestions from all, even from laymen like me. If the suggestions are good for the country they should be broadminded to implement it.

How long they keep themselves isolated in self made chambers of petty politics ?

The country needs people of a different mindset  for thinking and implementing such radical thoughts !

Let us hope we get such thinking people by 2020 !


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